Response to UCL paper on the fiscal effects of immigration to the UK - Press Release

December 30, 2014

Net tax contribution by Eastern European migrants probably negative

Cost of all migrants in the UK has been £20 - £25 million per day between 1995 and 2011.

The contribution of migrants from Eastern Europe is very likely to have been negative. That is the conclusion of a Migrationwatch review, issued today, of a revised final paper published by the Centre for Research and Analysis of Migration at UCL in November on the fiscal outcome of immigration to the UK.

The CReAM paper claimed that, between 2001 and 2011, recent migrants from Eastern Europe had made a net contribution of £5 billion to the Treasury. However, a detailed examination shows that this is based on most optimistic assumptions, some of which are simply incredible. For example, to obtain that result the researchers had to assume that even the most recently arrived migrants have stakes in UK business assets equal to those of life long residents and that, therefore, they can be treated as paying corporate taxes and business rates to the same extent. Given that 90% of these migrants are in low skilled employment, this assumption appears to have no basis in evidence. The researchers have tucked away in an appendix the fact that this accounts for over 98% of the claimed £5bn so, just without this assumption, the overall fiscal contribution by recent A10 migrants would be reduced essentially to nothing.

This is not the only extreme assumption behind their headline figure of £5bn. Another was that no money was sent home by these workers, which of course would otherwise have resulted in their spending less in the UK and contributing less in indirect taxes. As the researchers own alternative scenario shows, assuming lower consumption by migrants would further reduce the tax contribution of those from Eastern European by nearly £3 billion, pushing their contribution firmly into negative territory.

The CReAM press release was heavily spun to focus on European migration. However, the major finding which was simply not mentioned in the press release was that the total fiscal cost between 1995 and 2011 of all migrants in the UK was, according to their latest calculations, between £115 billion and £159 billion. This is up from £98bn in their original paper and in line with Migrationwatch’s assessment of that paper of a more likely cost of £148 billion. Thus, even on their own figures, buried in the report, the cost to the taxpayer of all migration was around £20 to £25 million per day between 1995 and 2011.

Other significant points are described in the attached review

Commenting, Lord Green of Deddington said “The press release on the UCL paper was very heavily spun. The value or otherwise of immigration should be based on the best estimate of the facts. To base the reporting of results on extreme assumptions about selected groups of immigrants over particular periods is simply to mislead the public”.